Dashboard: April 2005

Optimism at small businesses has risen sharply this year. Eighty-five percent of small businesses see growth opportunities for their companies during the March to September timeframe, according to the OPEN Small Business Network 2005 Semi-Annual Monitor from American Express. That's up from 72 percent last year and 56 percent in 2003. The figures are based on a survey of 627 U.S. small-business owners and managers of com-panies with fewer than 100 employees.

In addition, more than half of the businesses expect this year's revenues to exceed last year's, and 66 percent plan to make capital investments by September. Among these, new technology purchases top the list (43 percent), followed by office equipment (27 percent), office furnishings (17 percent), manufacturing equipment (16 percent) and real estate (14 percent).

In another poll, 77 percent of morethan 50,000 small businesses said they would invest in new technology this year. The poll was taken by SBTV.com,an online site for small businesses. These businesses clearly understand that technology can help them better manage their companies.

If your company is in retail trade, then it must have less than $6 million in average annual receipts to be called small, according to the U.S. Small Business Administration (SBA). If your company is in information technology, however, it can earn up to $21 million a year and stillbe considered small. Then, again, if your companyis in manufacturing, it's the number of employees,not average annual receipts, that determines whether you're small. (Fewer than 500.)

Confused? That's just the tip of the iceberg. In fact, the SBA currently uses 1,100 different standards, depending on the industry, to define the "small" in small business. That official definition is important to many companies because it determines whether they are eligible for loans and other SBA programs.

Clarity may be on the way, however. The SBA is asking for input on ways to simplify the system. "We felt there was just too much complexity," says Gary Jackson, assistant administrator for size standards at the SBA in Washington, D.C. Last year, the SBA proposed categorizing all companies by number of employees only, rather than some by employee number and others by amount of receipts, and consolidating industry segments into fewer categories. But many small businesses objected because they would lose their small-business- status- under such a system, says Jackson.

So the SBA has gone back to the drawing board. You can get more information at www.sba.gov/size.

CEOs who are also the founders of their companies earn $50,000 less than nonfounder CEOs, according to a survey of venture-backed companies by VentureOne, a market research company in San Francisco. While the average nonfounding CEO earns $200,000 a year, founders earn only about $150,000. However, the founders typically receive a larger equity stake—8.7 percent compared to 4.9 percent for CEOs only.

Women business owners are concerned about the rising costs of health care and energy, according to a recent survey by Women Impacting Public Policy (WIPP), a bi-partisan public policy group.

More than 70 percent of the 500-plus respondents pinpointed health care as the most important issue impacting growth of their businesses. Almost 84 percent of those respondents believe that an overhaul of the health-care system is necessary while 72 percent believe that association health plans would be the most helpful for small businesses to control costs.

One-half the respondents ranked energy as the second most important issue. Some 78 percent favored developing alternative energy sources by providing tax and monetary incentives to manufacturers and users.

Next, 46 percent identified Social Security as the third most important issue. More than 70 percent believe Congress should immediately address potential problems with the program, and 44 percent favored eliminating the current $90,000 ceiling on wages taxed as the best alternative to fix the current Social Security system.

Tax reform ranked fourth with a 45-percent response. Fifty-seven percent believe small businesses would benefit most from tax simplification. Also, 90 percent believe the highest current rate of estate tax, 47 percent, is too high.

Small businesses that

Sources: National Federation of Independent Business and American Express Small Business Survey.

In May, a federal judge ordered the U.S. Small Business Administration to turn over the original version of a report detailing how government contracts designated for small businesses sometimes go to big companies.

The order was the result of a complaint filed by the American Small Business League, an advocacy group in Petaluma, Calif. The ASBL alleges that the earlier version of the report contains information suggesting some companies may have "intentionally misrepresented" themselves as small businesses in order to receive contracts.

The final version of the report, which was published by the SBA in December, says that roughly $2 billionin federal contract money believed to have goneto small businesses actually went to large companiesin fiscal 2002. The report does not allege any wrongdoing, instead blaming regulation loopholes and computer coding systems, among other things.

Seventy-one percent of all small businesses with 20 to 249 employees have high-speed Internet service, according to a recent poll by the National Federation of Independent Business. Of those, 44.4 percent use Digital Subscriber Line (DSL), 22.2 percent use cable modems, 18.5 percent use T1 lines and 5.6 percent use wireless or satellite connections (9.3 percent don't know or declined to answer). Only 3.8 percent of these businesses reported using Voice over Internet Protocol telephone service. The full report, which also includes statistics on cell-phone and fixed-line phone use, is at www.nfib.com/research.